A week in telecoms: Telefónica adds cybersecurity to Microsoft alliance

In our weekly news round-up, we look at Deutsche Telekom’s Q1 results as well as Telstra’s retrenching plans, LG Uplus’ AI ambitions and Elisa’s 5G standalone progress

Deutsche Telekom’s Europe’s segment ‘leads the pack’ in Q1 2024

Deutsche Telekom’s (DT) earnings presentations are often heavily skewed towards its German and US businesses, and with good reason since these are the two biggest revenue-generating regions for the group.

However, during the recent earnings call for the first quarter of 2024, CEO Timotheus Höttges called out the Europe segment after it produced what he called a “remarkable result” in the first quarter (Q1) of 2024.

Here, Q1 revenue increased by 6.3% on a reported basis year-over-year to just under €3 billion, while adjusted earnings before interest, tax, depreciation and amortization after leases (EBITDAaL) increased 8.7% to just over €1 billion.

According to Höttges, Europe is “leading the pack right now. The numbers in terms of growth and earnings look very good.”

DT's Europe segment excluding Germany covers Austria, Croatia, Czech Republic, Greece, Hungary, Romania, Poland and Slovakia. The segment also includes national companies (NatCos) in North Macedonia, Montenegro and the GTS Central Europe group in Romania, as well as the Europe headquarters.

In Germany, revenue increased by 2.6% to €6.3 billion, while adjusted EBITDAaL increased by 3.5% to €2.6 billion ($2.8 billion). Overall, total DT group net revenue in Q1 2024 increased by 1.6% on an organic and 0.4% on a reported basis to €27.9 billion ($30.3 billion), and adjusted EBITDAaL rose 5.8% to €10.5 billion ($11.4 billion).

As always, Höttges made use of the earnings call to express his views on latest industry developments. This quarter, for example, he was highly critical of Bundesnetzagentur (BNetzA) over what the German regulator will expect from the three established mobile network operators in Germany in return for the extension of certain spectrum usage rights by five years from 202

BNetzA has just opened a consultation on its new proposal to extend spectrum allocations in the 800MHz, 1,800MHz and 2.6GHz bands. The proposed extension stipulates new coverage obligations for the three operators concerned, focusing mainly on improving their networks in rural areas and along roads. In addition, established operators would have to give newcomer 1&1 some access to sub-1GHz bands.

While DT welcomes the move to extend usage rights for these three bands rather than hold an auction in 2025, Höttges said the “entirely unrealistic” coverage obligations will be expensive and will “completely wipe out the intended effect of awarding the licenses.”

He also levelled criticism at BNetzA over what he sees as preferential treatment for newcomer 1&1, which is in the processing of building a fourth 5G network based on open RAN technology but has been beset by delays.

For its part, 1&1, which would not benefit from the license extension, has welcomed efforts by the regulator to ensure it retains access to mid and low spectrum bands.

Finland’s Elisa launches standalone 5G offers for businesses

Elisa is making some noise about the availability of specific standalone 5G subscriptions for both enterprise customers and consumers, with a nod towards the use of network slicing functionality to enable “congestion-free subscriptions” as well as private networks for enterprises.

The Finnish operator, which launched 5G mobile phone subscriptions for customers in February, is now offering 5G SA mobile broadband and phone subscriptions for enterprises and said the consumer 5G SA offering will also include mobile broadband later in May.

Essentially, the operator is attempting to tie 5G SA to specific enterprise use cases, namely a 5G SA fixed wireless access (FWA) service that “utilises network slicing,” and a 5G SA dongle for mobile working. In the autumn, “companies will also be able to benefit from standalone 5G corporate networks utilising network slicing,” the operator said.

Petteri Svensson, Director of Mobile business in Elisa’s Corporate Business, said the operator has “mapped out Finnish companies’ needs for the way they use their subscriptions, and many companies already require more stable connections.”

Svensson also highlighted the role that artificial intelligence (AI) is expected to play in mobile working, pointing to the ability to use a device to “help you search for product information, place orders and manage customer contacts smoothly by using AI alongside the physical work.”

Telia Finland has also launched 5G SA-based FWA services for households. In 2021, DNA said all of its 5G base stations were connected to a core network that supports 5G SA architecture and indicated that customers would be able to start using 5G SA services during 2022.

According to the April 2024 update from the Global mobile Suppliers Association (GSA), at least 49 operators in 29 countries and territories are now understood to have launched or deployed public 5G SA networks.

LG Uplus outlines AI ambitions with ‘AX’ strategy

South Korea-based operator LG Uplus set out its ambitions to accelerate the deployment of artificial intelligence (AI) with the launch of a new brand slogan that melds AI with customer experience (CX) and digital transformation (DX).

The new slogan is broadly translated as a “growth leading AX company,” which essentially means a “company that leads customer growth through AI conversion.”

LG Uplus is following in the footsteps of domestic rivals SK Telecom and KT, both of which have unveiled wide-reaching AI ambitions. For example, KT recently announced it is expanding its advanced AI technology to the group’s entire media business, while SKT has been driving global R&D efforts on GenAI and large language models.

According LG Uplus, the new slogan is “intended to focus on AX as a key means for customer experience (CX) innovation.”

Hwang Hyun-sik, President of LG Uplus, also said: “We created a new brand slogan … with the intention of becoming a company that leads digital innovation by focusing on DX (digital transformation) using AI.”

He noted that it is “important to incorporate AI into all areas of the company,” including CX, DX and platforms. However, LG Uplus is keen to avoid using “technology-related terms as much as possible,” hence the adoption of AX instead.

Joon-Hyeon Seong, AI/Data Product Manager at LG Uplus, added that the goal is to “apply AI to all businesses and tasks across the company.”

Currently, the operator is focusing on developing the large language model ixi-GEN in collaboration with LG AI Research. The LLM learns the company’s communications and platform data on the hyperscale multimodal AI Exaone created by LG AI Research.

In future, LG Uplus plans to collaborate with big tech companies around the world in order to realize its AI, or AX, ambitions.

Telefónica forms cybersecurity collaboration with Microsoft

Telefónica signed an agreement with Microsoft on the provision of nextgeneration cybersecurity services to enterprises around the globe, further expanding a longstanding partnership between the two groups.

According to a deal signed by digital services arm Telefónica Tech and Microsoft, the aim is to integrate the US-based tech giant’s “advanced security and artificial intelligence solutions with Telefónica Tech’s operational cybersecurity expertise.”

For example, the operator will integrate Microsoft Copilot for Security, a generative AI solution based on OpenAI architecture that is designed to support incident response, threat hunting, intelligence gathering, and posture management. According to Telefónica, enterprise customers will “benefit from proactive, integrated, automated and realtime security management.”

Telefónica Tech’s cybersecurity portfolio already includes services such as detection and response, identity access management, cyber threat intelligence, and data protection. It operates Digital Operations Centres in Colombia and Spain, as well as eleven Security Operations Centres.

Indeed, Telefónica Group’s wider Growth, Profitability, and Sustainability (GPS) strategy includes further growth of its cybersecurity segment, with Telefónica Tech tasked with achieving €3 billion in total revenue by the end of 2026.

María Jesús Almazor, Chief Operating Officer at Telefónica Tech for Spain and the Americas, said: “This global cooperation between Telefónica Tech and Microsoft is a key milestone. Companies around the world will take advantage of all the opportunities that technology offers to digitize processes and jobs, including tools based on generative artificial intelligence, with maximum security.”

Alberto Granados, President of Microsoft Spain, added: “The collaboration between Telefónica Tech and Microsoft will allow us to offer our customers innovative security solutions powered by Artificial Intelligence with the aim of improving their cyber-resilience.”

Telefónica and Microsoft also collaborate in diverse fields such as AI, APIs, cloud, edge computing and enterprise software.

Telstra plans to cut up to 2,800 jobs

Telstra’s CEO Vicki Brady had the unenviable task this week of telling the Australian telco’s workforce that up to 2,800 of them could lose their jobs. Consultation on 377 roles will begin immediately, mainly in Telstra Enterprise, and the majority of the job cuts will take place this year.

Brady announced a number of measures that are designed to “reset” Telstra’s enterprise business, simplify its operations and improve productivity. While describing such measures as “difficult,” she said they are necessary to allow Telstra to become a “more efficient and sustainable business.”

Telstra announced in February that it would be carrying out a “detailed review of Telstra Enterprise.” It said a number of actions have now been identified to “sharpen its focus on areas where it has the strongest differentiation, further improve delivery for customers and improve the cost base of the business.”

These include streamlining the product portfolio, reducing the number of network applications and services products in market by close to two thirds; simplifying customer sales and service; and

reducing the cost base of the Telstra Purple tech services business. A further update will be provided in August.

In addition, Telstra plans to “reshape” some of its internal operations by moving its Global Business Services function into other parts of the business. It also continues to focus “on a range of actions to reduce its non-labour and indirect labour costs.”

With these actions, Telstra said it expected to achieve A$350 million of the cost reduction ambitions set out in its T25 strategy by the end of the 2025 financial year (FY25).

Telstra reiterated its FY24 guidance and provided FY25 underlying EBITDA guidance of A$8.4 billion - A$8.7 billion. Brady said Telstra was just over 12 months from completing its T25 strategy and claimed that good progress had been made in a range of areas, including improving customer experience.

Also noted…

The Spanish government has achieved its objective of acquiring a 10% stake in Telefónica.

VodafoneZiggo has appointed former Sky UK CEO Stephen van Rooyen as its new CEO.

BT has “refined” its digital switchover program to account for vulnerable customers and those with additional needs.